Feeding Frenzy: House in The Beach Goes for $600K Over Asking Price

I don't think it's the bidding war that most home buyers have a problem with.  It's the way in which agents (I too am one) conduct bidding wars.

The lack of transparency in the multiple offer process is what drives home buyer anxiety.

The status quo is no longer acceptable with today's home buyers.  Today's consumers expect honest, timely and open communication from the businesses they deal with.  The longer the real estate industry takes to make this process more transparent the less relevant real estate agents become.

It seems like everyone's been waiting on this market to hit it's imminent cool-off for a long time now.  Maybe I'm just too young to see long-term real estate trends, but it feels to me like I'll never be able to afford property in this city.

I wonder if the continued addition of condos to the cityscape is actually driving up the cost and desirability of houses? In Vancouver it's not unheard of to hear of houses going for a million and I heard on CBC this week that the average selling price in NYC is $1.3 million (if scoring an apartment in Manhattan requires one to learn a new language and acquire a secret decoder ring, imagine what a bidding war would be like?). At least Toronto can keep building up and out to keep prices relatively in check if that's the goal.

I agree with John that the real estate business is in desperate need of an overhaul. Look at the cheesy, formula print advertising  and their utter lack of doing anything remotely interesting online. Talk about missed opportunities...

Lily,

 I think you're right.  In Van there's a huge gap between carrying the cost of a house and carrying the cost of a condo.

 We started looking at condos, but once you add the condo fees on to the mortgage payment, a condo isn't necessarily more affordable than a modest town in T-Bellwoods, Corktown or Riverdale. 

So people are consistently paying more than the asking price, and still the councillors wimped out on the land transfer tax?  It seems like people would have no problem covering it.

so more people are buying homes and paying more for houses.. shouldn't the property tax collected in the last couple of years have gone up... a lot? and the city still in debt? this doesn't make any sense at all, unless the city has been wasting our money....

btw, I am wondering if the buyer of that property paid cash...

And here I am waiting for the housing bubble to pop... :D and then it'll be my turn to buy ;)

People are always comparing Toronto to New York or London in terms of affordability, except many fail to recognize that the median incomes in these cities are far higher than Toronto.

Kendrew, personally I'm waiting for gas to go back down to $0.55/litre until I fill up my car.  I think the gasoline market has been in a bubble since 1993, it's bound to crash any day.

Mr. Sanchez, even adjusting for lower wages Toronto's housing is much more affordable than other world cities: http://www.fcpp.org/main/publication_detail.php?PubID=1654

The Beerad: The figures for median home prices in the study are not reflective of the median home prices in Toronto....which around around $350K vs. the $295K. Secondly, if you look at median household incomes for Toronto you see that it has declined in real terms(inflation adjusted)....if you compare 2001 data from StatsCan. A disconnect: Declining real median house hold incomes vs. significantly increasing home prices.

Sanchez,

You're forgetting about the exchange rate (the study was done at Q3/06, when the CAD  was about 84 cents to the USD).  The C$350K you cite sounds about right, which is equiv. to US$295K given an 84 cent exchange.  Toronto's housing prices would have to be another 50% higher to put us in Vancouver's league of (un)affordability, or another 80-100% higher to put us in NYC/SanFran/London territory.

Your point about static (or declining) real incomes and rising home prices is totally valid, and might be explained by the fact that, as above, the market was undervalued to begin with and still has a long way to go.

How is it undervalued when rents haven't moved much in the last 6 years? At most flat...when adjusted for inflation.

Sanchez,

 I don't think we're getting anywhere.  For every measure that suggests TO is undervalued, there's another that suggests that it is overvalued. This isn't the real estate boom in 1991 or the tech boom in 2000...it's just a market doing its thing.

The Beerad: Are you an agent?

I have a hard time believing statements that are open ended such as 'it was undervalued' . Compared to what? By what measure? No one is comparing it to 1991 or the tech boom. Let's get down to fundamentals.

Sanchez, I'm not an agent or in real estate in any way, but I am financially literate.

You original comment suggested that real estate is more affordable in other big world cities than in Toronto, when adjusting for higher incomes.  Doing some research, we find it's the opposite.

My statement wasn't open ended or absolute.  No one measure of value is going to give you a completely accurate picture.  Using the method you suggested in the first place, you would have to conclude Toronto is undervalued, as opposed to overvalued.

...which is moot anyway, because for every method that suggests TO is undervalued, there's another which suggests the inverse.

I can't beleive I'm arguing with someone on the internet.  Beerad out.